Wall Street equity strategists turned a tad bit less pessimistic last month than they were earlier this summer. But don’t let that fool you; overall, they still feel as bearish as they’ve felt since the Reagan Administration.

In research note released earlier today, Savita Subramanian of Bank of America Merrill Lynch said her Wall Street equity sentiment indicator ticked slightly higher for the first time in six months to 44.4. But this gauge still remains right around its lowest level at least since 1985 (which is as far back as BofA Merrill’s data goes). The indicator clocked in at a record low 43.9 last month. The traditional long-term average is about 60-65.

The S&P 500 has gained more than 12% this year, plowing through a frontal assault of Euroworries and political headwinds to touch late 2007 highs — it’s enough to warm the heart of even the most bearish investors.

That’s how we’re reading the market move, following the latest monthly report by the global investment committee at Morgan Stanley Smith Barney. The firm, which made the move on Friday, upgrades their view of the market to a neutral footing, from a previous outlook of severe doom and gloom.

You’d be forgiven if you pointed out that the timing of their move isn’t exactly auspicious. Last October, the firm turned downright depressing, lowering their view to a “market underweight” for the first time in years, thanks to the endless squabbling in Europe and Washington, and declining investor faith in policymakers. All of those concerns, of course, are more or less spot-on.

And yet, within days of their call, the U.S. stock market got up on its rocketship anyway and blasted higher by 25%, where we sit today. All of which goes to underscore how difficult these markets can be. (We’ve been following Smith Barney’s calls here at MarketBeat. Read two of them, here and here.)

All of which raises an obvious question: if Smith Barney was frustrated enough with global policymakers to throw in the towel on the markets, has anything changed since then to make them more optimistic? The answer, alas, is one that every man, woman and child is now intimately familiar with it — the Fed, the European Central Bank, and these central bankers’ power to more or less pump unlimited streams of money into the global economy.

Notoriously a bullish bunch, leading strategists at Wall Street’s biggest firms are finding it difficult to believe in the stock market’s recent rally. For contrarians, that alone suggests this is a great buying opportunity.

In a research note released yesterday, Savita Subramanian of BofA Merrill Lynch says her Wall Street equity sentiment indicator fell to its lowest level since the late 1990s. This market gauge measures how her Wall Street peers view the market. The more bearish the crowd is, the more bullish she becomes. And vice versa.

Here’s more from Subramanian’s note, titled “Wall Street proclaims the death of equities”:

After triggering a buy signal in May, our measure of Wall Street bullishness on stocks declined again, marking the ninth time in eleven months that the indicator has fallen. The 0.8ppt decline pushed the indicator down to 49.3, the first time below 50 in nearly 15 years, suggesting that sell side strategists are now more bearish on equities than they were at any point during the collapse of the Tech Bubble or the recent Financial Crisis. Given the contrarian nature of this indicator, we are encouraged by Wall Street’s lack of optimism and the fact that strategists are recommending that investors significantly underweight equities vs. a traditional long-term average benchmark weighting of 60-65%.

Wall Street equity strategists are a notoriously bullish bunch. But even this optimistic crew is finding it difficult to believe the recent rally.

For contrarians, this represents a great buying opportunity.

In a research note today, Savita Subramanian of BofA Merrill Lynch says her Wall Street equity sentiment indicator hit a fresh two-year low in January. This contrarian market gauge measures how her Wall Street peers view the market. The more bearish the crowd is, the more bullish she becomes. And vice versa.

The measure has dropped in five out of the last six months, suggesting Wall Street remains skeptical even as the S&P 500 has surged nearly 20% off its October lows.

At 55.6, the indicator is within 1ppt of triggering a Buy signal. A drop below the current Buy threshold of 55.4 would represent a major decline in Wall Street’s bullishness on stocks relative to the last 15 years.

This sell-side indicator is based on average recommended equity allocation from Wall Street strategists. For Ms. Subramanian, this data point suggests more gains could be on the horizon.

The financial press sometimes is ahead of the curve, but it can also act as a contrarian indicator.

The most famous incidence of this is the BusinessWeek story in August 1979 that proclaimed the Death of Equities. This story ran on the eve of what would become a remarkable two-decade surge in shares, capped by the craziness of the Internet bubble of the late 1990s.

With that in mind, Ed Yardeni, head of Yardeni Research, takes a tour of the recent financial press landscape. He finds plenty of really scary headlines, including:

The chart of the U.S. dollar index shows the weakness in the greenback, as the price remains well below the 200-day and 50-day moving averages.

It’s no secret that investors worldwide have been hating on the dollar. Since end of August, the U.S. dollar index — which tracks the dollar against a trade-weighted basket of currencies — is down some 7%, as investors took to heart the hardly subtle Fed hints about another dose of quantitative easing. But Andy Brenner, head of global emerging markets fixed income at Guggenheim Securities, writes in his morning note that the anti-dollar trade is looking a bit crowded:

Anti dollar trade is very crowded and we would look for a major reversal…similar to late august when equity indices sentiment recently reached such a bearish level, the markets bounced.. does anyone really think that europe’s troubles are behind us? and that the euro is the currency to be long at 1.40?…look for a significant dollar reversal trade in the next few weeks.

Yesterday, we pointed out one Reuters story that seemed to us a clear cut sign that gold mania is clearly crossing that ever important divide between clever and stupid: “A German firm that installs and manages gold vending machines aims to introduce them into the United States this year.”

A couple comments on our post seemed genuinely confused as to why we would see this as a giant neon sell signal on the yellow mental. “I do not know why this would be a reason to sell. I think it sounds like the beginning of gold becoming ‘mainstream,’” wrote one commenter.

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